AER LINGUS is involved in merger talks with another airline interested in taking a significant stake in the Irish carrier, the Irish Independent has learned.

While Aer Lingus management has determined that the possible deal will only result in limited revenue and growth opportunities, it could generate cost savings of between €35m and €50m across a number of operational activities. There are also potential fleet and maintenance synergies that have been identified by Aer Lingus.

The UK's Competition Commission said in a report earlier this week there had been talks. But this is the first time it has been revealed that the talks are ongoing. News of the talks were revealed as the Competition Commission finalised its probe into Ryanair's 29.8pc stake in Aer Lingus by ordering the Michael O'Leary-headed airline to cut its holding to just 5pc.

It is thought there is no sign of any deal being sealed soon.

Aer Lingus also held talks about acquiring another unnamed airline. That is understood to relate to Aer Arann, which was restructured last year and which is now controlled by UK transport group Stobart. Aer Arann operates the Aer Lingus Regional service under a franchise agreement.

The Competition Commission also revealed Aer Lingus entered confidential discussions early in 2012 with an unnamed airline about a "possible combination".

The airline's management, headed by chief executive Christoph Mueller and chairman Colm Barrington, believed at the time Ryanair may have sought to sell its 29.8pc stake in Aer Lingus, increasing the attractiveness of the former state-owned carrier to a suitor.

The readiness of the airline Aer Lingus was engaged in talks with to enter into more detailed discussions was understood by Aer Lingus to hinge on the expectation Ryanair might exit or see its involvement in Aer Lingus reduced.

"Discussions had progressed to the stage of a confidential exchange of financial information, and contacts had taken place between senior management and respective financial advisers, but these ended following the announcement of Ryanair's hostile bid," Aer Lingus told the UK watchdog.

"This was primarily because it [the other airline] did not want to be perceived as a key player in the acquisition process, and because Aer Lingus management needed to focus on their defence against the proposed takeover," the commission noted.

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It didn't name the airline that was in talks with Aer Lingus.

Abu Dhabi-based Etihad already owns close to 3pc of Aer Lingus and has made no secret that it is interested in increasing its stake. A spokesman for Etihad declined to comment as did a spokesman for Aer Lingus.

Willie Walsh, boss of British Airways owner IAG, has consistently ruled out any interest in acquiring Aer Lingus. Industry sources say it is also possible Aer Lingus held talks with Virgin before Delta took a 49pc stake in the UK airline.

Internal documents provided by Aer Lingus to the Competition Commission show it considered two possible scenarios in terms of a combination with another airline, but noted in both cases a shareholder vote would have been required.

The other airline said any proposal would need to have been acceptable to Ryanair as shareholder approval for a deal would have been required.